Türkiye İMSAD Releases Monthly Sector Report

Türkiye İMSAD released the October results of its Monthly Sector Report, which is closely monitored by construction sector and economic circles. Due to weakening in global economies, the contraction in the construction sector, coupled with domestic economic developments, reduced production in the construction materials industry. The production decline is expected to continue in the coming months. However, the construction sector remains active in Gulf and Central Asian countries that boost their revenues through energy exports.

The October results of the Monthly Sector Report prepared by Türkiye İMSAD, the umbrella organization of the construction materials industry, have been released. The report contained the following findings:

Parallel to weakening in global economies and construction markets, domestic economic developments and slowdown in the sector have led to contraction in construction materials industry production. The construction sector, being the first to be affected by economic slowdown and contraction, and the resulting production decline in the construction materials industry have been providing leading recession indicators for the broader economy over the past three months. In the construction materials industry, production remained unchanged in June compared to the same month of the previous year, declined 7.3% in July, and fell 0.3% in August. Accordingly, production growth in the first eight months of the year reached 1.2% compared to the same period of the previous year. While production decline is expected to continue in the coming months, production is expected to remain at the same level as the previous year over the full year. When examining the first eight months of the year by sub-sectors compared to the same period of the previous year, contractions in main product groups used in the initial stages of construction are noteworthy. The production declines in construction steel, cement, ready-mixed concrete, and brick-tile production can be interpreted as reflecting a decrease in new construction starts both domestically and internationally. In the production of construction interior products, different trends are observed, but generally growth is occurring. Ceramic wall coverings, ceramic sanitary ware, glass, parquet and flooring, processed stone, wood building materials, and steel profiles and fasteners showed relatively high growth, while metal doors and windows production declined. In products used in the final stages of construction and finishing work, movements in different directions are evident. Paints and plastic building materials production recorded high growth, while locks and fittings, insulated cables, and plumbing fixtures, faucets, valves production experienced contraction. Production data for three major construction materials groups indicate that new construction starts are decreasing and ongoing projects are slowing. These trends are progressing similarly in both domestic and export markets. While construction contraction in export markets is estimated to continue for two to three quarters, in the domestic market, new initiatives—particularly social housing projects ahead of elections—as well as possible new credit packages and tax reductions are expected to support demand and production in the construction materials industry.